What’s the True Cost of Merchant Services & PCI Compliance? Part I

You might be thinking about payments all wrong. And you may not understand the true cost of merchant services. 

It’s easy to miss the forest for the trees when it comes to higher education payment systems. Many institutions get tunnel vision about securing the lowest processing cost without considering all the other critical factors. Those critical factors include things like reconciliation, IT network security, and PCI compliance. 

If you consider payment processing a standalone function, pricing is typically a variable fee based on the size of the transaction plus a fixed fee per transaction. It’s easy enough to calculate or estimate. 

However, before you use that cost as the basis for comparison, let’s ensure you compare apples to apples. Frequently, colleges and universities require much more than simply processing credit card payments. They need assistance with P2PE, PCI compliance and scope reduction, interchange optimization, ecommerce solutions, and reconciliation automation, to name a few. 

Universities often work with merchant services consultants who can offer specialized solutions and advice as part of a processing agreement. Should that be worth the same as a payment processing contract that doesn’t come with any additional services, features, or value? Let’s start by defining what might be included in the cost of merchant services and PCI compliance.

True Cost of Merchant Services & PCI Compliance: A Rundown

Below, we outline some of the top components that may be included as part of a processing agreement. 

Devices

Devices in payment processing refer to the hardware used to accept and process payment transactions, such as point-of-sale (POS) terminals, card readers, and mobile payment devices.

Merchant service providers assist merchants by supplying and maintaining these devices. This includes ensuring they are up-to-date with the latest technology and security standards. This support helps merchants accept various payment methods efficiently and securely, enhancing the customer experience.

Encryption

Encryption in payment processing is the method of converting sensitive payment information into a secure code to prevent unauthorized access during the transaction process.

Merchant service providers implement robust encryption protocols to protect transaction data from cyber threats. They provide the necessary tools and technologies to ensure that all payment information transmitted through merchant systems is encrypted, thereby safeguarding against data breaches.

Interchange Optimization

Interchange optimization involves adjusting payment processing practices to qualify for the lowest possible interchange rates. Interchange rates are fees paid by merchants to card-issuing banks for processing card payments.

Merchant service providers can assist merchants in achieving interchange optimization by analyzing transaction data, recommending best practices, and configuring payment systems to meet the criteria for lower rates. This process helps merchants reduce their overall transaction costs.

Ecommerce Solutions 

Ecommerce solutions are technologies and services that enable businesses to conduct transactions online, including shopping cart software, payment gateways, and fraud prevention tools.

Merchant service providers offer comprehensive ecommerce solutions that help merchants set up and manage online stores, integrate secure payment gateways, and implement fraud protection measures. These solutions streamline online sales processes and enhance security, allowing merchants to effectively serve digital consumers.

PCI DSS Requirements and Scope Reduction

The Payment Card Industry Data Security Standard (PCI DSS) is a set of security standards. Its goal is to protect card information during and after a financial transaction. Scope reduction involves minimizing the areas of a merchant’s operations that are subject to PCI DSS compliance.

Merchant service providers guide merchants through PCI DSS compliance by offering tools and strategies to reduce the scope of their cardholder data environment. This includes using tokenization, encryption, and secure payment gateways. These tools and strategies can simplify compliance efforts and reduce the risk of data breaches.

The cost of merchant service can entail quite a bit. In part two, we’ll explain the real cost of merchant services associated with each of these areas and how they might be reflected in your payment. 

As always, if you have any questions or would like a free consultation, reach out today. 

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